ACIT-1(1), INDORE vs. KRITI NUTRIENTS LIMITED, INDORE

2.2 That the assessee being aggrieved by the “Impugned Assessment Order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has partly allowed the first appeal of the assessee on the grounds & reasons stated therein.

2.3 That the revenue being aggrieved by the “Impugned Order” has preferred the instant appeal before this Tribunal and has raised the following grounds of appeal in the prescribed form 36 against the “Impugned Order” which are as under:

“1. Whether on the facts and in the circumstances of the case, the Lal. CIT(A) was justified in restricting the gross profit at 4.75% without appreciating the facts and evidences mentioned in the assessment order by the AO 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in restricting the gross profit at 4.75% without appreciating the facts that Ld. AO has rejected the books of assessee after pointing out various serious defects in the books of the assessee 3. Whether on the facts and in the circumstances of the case, the ld. CTT(A) erred in law in deleting the Addition of Rs. 16.57 lacs as Travelling & Conveyance Expenses & Rs. 182.80 laes as Sales Promotion Expenses made by AO without appreciating the facts that Page 3 of 107 Kriti Nutrients Ltd.

A.Y. 2021-22 the assessee was failed to furnish documentary evidences during assessment proceeding.

4. Whether on the facts and in the circumstances of the case, the Ld. CII(A) erred in law in deleting the Addition of Rs.60,03,000/-as Disallowance of Foreign Currency Fluctuation loss made by AO without appreciating the facts that the assessee was failed to furnish documentary evidences during assessment proceedings.

They have kriti brand Soya Oil. They are also engaged in the business of “manufacturing & selling by products” related to Soya bean. The assessee is a listed company on the stock

Page 4 of 107 A.Y. 2021-22 exchanges in India. That the case of the assessee was selected for scrutiny under CASS and that a statutory notice dated 28.06.2022 u/s 143(2) of the Act was issued to the assessee company which was duly served upon on the assessee company.

Thereafter, a detailed questionnaire along with notice u/s 142(1) dated 22.09.2022 of the Act was issued & served upon the assessee company. Further the notices were too issued to the assessee company from time to time. The Ld. DR appearing for & on behalf of the revenue then invited our attention to para 4 of the “Impugned Assessment Order” which we reproduce as below:

A.Y. 2021-22 3.2 The Ld. DR basis above tabulated chart submitted that the assessee was noncompliant & only some part compliance was made during the course of the assessment proceedings. It was emphasised by the Ld. DR that no full and complete compliance was made by the assessee company during the course of the assessment proceedings. The Ld. DR invited attention to the serial no.3 & 5 of the above table (supra) to demonstrate what partial compliances were made by the assesee company.

Thereafter the Ld. DR appearing for the revenue invited attention

“4.1 For an appraisal, various generalized notices issued thereby providing opportunities to the assessee are reproduced herein below for an easy reference: DIN: ITBA/AST/F/142(1)/2022-23/1046528545(1) dated 31.10.2022 “...Your attention is invited to various notices issued u/s. 142(1) of the Act whereby certain information/explanation/Documentary evidences; to support your claim made in the return of income filed for the AY under consideration were requisitioned. Despite lapse of sufficient time, no details / part details are made available by you, based upon which the assessment proceedings cannot be finalized. You may appreciate that the assessment proceedings in your case is getting barred by limitation of 31.12.2022 and as such very little time is left for its judicious finalization. By this, you are hereby given a FINAL OPPURTUNITY and advised to fumish all asked for information/explanation / Documentary evidences complete in all respect to support your claim on the issues raised. In absence of the details being submitted, you are requested to show cause as to why it may not be considered that you do not possess the information requisitioned and thus the assessment proceedings may not be finalized ex-parte under provisions of sec. 144 of the Act, based upon the facts and the information available on record" DIN: ITBA/AST/S/85/2022-23/1047247627(1) dated 11.11.2022 -You are advised to submit your response immediately by logging in to your registered account on the e-filing portal and through the 'e- proceeding tab 3. It may please be noted that failure to comply with the notice under section 142(1) will result in exparte assessment order and other penal consequences DIN: BA/AST/F/143(3)(SCN)/20 22-23/1047750845(1) dated 01.12.2022 Your attention is invited to various notices issued u/s 143(2)/142(1) of the Act whereby certain information/explanation / Documentary evidences to support your claim made in the return of income, filed for the AY under consideration were requisitioned. Subsequently, Show cause notices have also been issued thereby proposing variation to Page 8 of 107 A.Y. 2021-22 your total income on certain issues. Despite lapse of sufficient time, part details are made available by you, based upon which the assessment proceedings cannot be finalized. By this, you are hereby given a FINAL OPPURTUNITY and advised to meticulously venify all the notice(s) issued and the replies made by you and furnish all asked for information / explanation /Documentary evidences complete in all respect to support your claim. In case, any query is not found applicable, kindly confirm it in writing. In absence of the details being submitted, you are requested to show cause as to why the assessment proceedings may not be finalized based upon the facts and the information available on record without affording further opportunity. You are hereby given an opportunity to show cause why proposed variation should not be made and the assessment should not be completed accordingly.”

3.3 The Ld. Dr for the revenue then placed reliance on para 4.2 4.3 & 4.4 of the “Impugned Assessment Order” which we reproduce as below:

“4.2 From the history of notice(s) issued and the compliance made by the assessee company it is amply clear that the assessee was provided with an adequate number of opportunities at every stage of the assessment proceedings. From the notices issued dated: 31.10.2022, 11.11.2022, and 01.12.2022 it is clear that the assessee company was duly appraised of the fact, that in event of: Non-supply of the information requisitioned Non-furnishing of the documentary evidences asked for; and Non-providing of the suitable explanation to the queries raised The assessment proceedings will be finalized ex-prate resorting to provisions of sec. 144 of the Act. However, the assessee company has furnished the part details via different submissions, which were examined in detail, and couples of documents as submitted electronically were retained and made part of the records. 4.3 It can be seen that from the issuance of the initial notice dated 28.06.2022 till the issuance of the final notice dated 01.12.2022. the assessee company has merely submitted basic details and for all

Page 9 of 107 A.Y. 2021-22 purposes placed its strong reliance upon the facts and figures reported in the final accounts and disclosed in the Audit Report filed claiming that the same has been certified by the qualified Charted Accountant. Even after grant of notices suggesting the completion of assessment proceedings ex-prate, the assessee company did not bothered to furnish the details called for legitimately under the provisions of the IT Act. As can be seen from the discussion made above the attitude of the assessee is found to be totally non-cooperative and recalcitrant. The question which arises at this stage is that what could have been the intention of the Assessee and reasons behind non furnishing of the details called for via various notices, in spite of receiving all the notices timely. All such possible questions, which come to the mind of the undersigned at this stage, can be listed as under: Question-1 Were the books of account not fully prepared and ready for the production during the assessment proceedings? Question-2 If the answer to the above question is yes, then it goes against the assessee. But if the answer is no, then why was the assessee so reluctant and so consistently reluctant in producing making it available the asked for information for the verification? Question-3 Did the books of account carry certain details and information which contravene The provisions of I.T. Act and whether such details and information's result into damaging findings for the assessee? Question 4 The history of non-compliance and the evident reluctance to furnish asked for details/information amply prove that the answer to question No. 3 is yes. However, if it is considered no, then what were the reasons and the intention of the assessee for non furnishing of the information and making available the asked for documentary evidences, for verification. Did such reasons exist and if the assessee showed such reasons to exist then whether such reasons were acceptable? 4.4. The answers to all the above questions do not require be specifically stating and recording in this order because the facts emerging in this case are self explanatory. Under these self explanatory facts, even a layman who is not aware of the procedure involved in the assessment proceedings of the I.T. Act can give conclusive answers to each of the above questions. It is sincerely believed that all honest answers would go against the assessee and prove that the assessee had indeed involved in deliberate and purposeful non-compliance and avoidance of specific requirements of the law.”

Page 10 of 107 A.Y. 2021-22 3.4 The Ld. DR for the revenue then contended that the Ld. AO had given enough opportunities to the assesee company & laid emphasis on para 5, 5.1 & 5.2 of the “Impugned Assessement Order” which we reproduce as below:-

“5 In view of the above facts and circumstances without any further delay and without being required to take into consideration any contentions of the assessee in this regard, it is hereby held that the credentials of the assessee as a compliant and cooperative assessee without having purpose of tax avoidance are extremely doubtful. Subsequent to such findings it needs to be pointed out that under such doubtful credentials the assessee is completely divested of any right to claim in future that the principles of natural justice and equity have not been served by the assessing officer. In the event, that any such contentions are made before any subsequent proceedings before the appellate authority then the merit of such contentions have to be left to be decided upon by the respective appellate authority after taking into account the real purpose and real intention of the assessee company in making such claims, contentions and actions. It is seen that certain intelligent breed of assessees furnish remain non-compliant at the stages of the assessment proceedings, however later on they raise the bogey of 'Non-observance of principles of natural justice and equity or proper opportunity. This is done primarily as a preemptive measure to ensure future success. 5.1 As the assesses was provided umpleen numbers of opportunities, it cannot be said that there is an infraction of the principles of natural justice. The assessee was well appraised about the evidences gathered available on record, which was intended to be utilized as evidence against him under the applicable provisions of the Act. In fact, the details as submitted by the assessee company while e Tiling the return of Income and the figures reported in the Audited Balance Sheet, PAL, account and Audit report submitted in form 3CD, are intended to be utilized as evidence against him. When a person does not avail the opportunity of hearing when granted, he would not be justified in alleging denial of opportunity of hearing. The rule of audi-alterum- partum and requirement of opportunity of hearing as regards assessment proceedings is not infinitely elastic which can be stretched to Interminable or illimitable limits and cannot be extended to boundless and unconditioned limit so as to hold that even if the concerned person does not avail the opportunity even after the Page 11 of 107 A.Y. 2021-22 opportunity is made available, the authority should continue to adjourn the proceedings ad-infinitum so as to honour and comply the requirement of granting opportunity of hearing on the issue in present case, the assessee company has merely made part submissions and did not supplied/furnished the crucial details vin. Sale/Purchase details, coples of ledger accounts and making available the quantitative details etc.. The said aspects cumulatively establish that the assessee is merely trying to delay the proceedings. As such, further opportunities are denied to the assessee, 5.2 In this context, reference is made to the observations by the Hon'ble Apex Court in para-13 of the decision in the case between The Chairman, Board of Mining Examination and Chief Inspector of Mines, and Anr. v. Ramjee. (AIR 1977 SC 965), which reads thus:- "13Natural justice is no unruly horse, no lurking land mine, nor a judicial cure-all, If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of auch essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating We can neither be finical nor fanatical but should be flexible yet firm in this jurisdiction. No man shall be hit below the bell that is the conscience of the matter.” 3.5 The Ld. DR for the revenue then invited attention to the fact that if the assessee company’s accounts are SAP based, audited & genuine then what prevented them for availing the so many opportunities before the Ld. AO which are detailed in the “Impugned Assessment Order” & then laid emphasis on para 7, 7.1,7.2,7.3,7.4 of the “Impugned Assessment Order”. It was submitted & repeated that once the assessee company is a listed company on BSE, once their accounts are SAP based & are audited that Perse does not mean & imply that in the scrutiny

Page 12 of 107 A.Y. 2021-22 assessment they should not cooperate with the revenue officials on the contrary once the scrutiny assessement has come they should cooperate with the department & that they have to give all the material information & documents which are sought from them. Most of the Information in today's time are available on click of the mouse. The reasoning adopted by th Ld. AO is therefore, right. The paragraphs 7, 7.1,7.2,7.3,7.4 relied & read upon by the Ld. DR from the “Impugned Assessment Order” is reproduced by me as below:

“7. The assessee company has made available the figures of total turnover recorded in the Books of accounts and the 'Gross Profit earned with rate of GP for the AY under consideration and immediately preceding three AYs i.e. for the AYs 2018 19, 2019-20 and 2020-21. It is observed that the GP rate is consistently falling since last three AYs As the assessee company failed to make available the asked for details, which can help to establish the reasons attributable for such drastic fall in Gross profit rate, the assessee was provided an opportunity in form of a specific show cause notice which reads as under: -Despite grant of large number of opportunities, no details are made available during the assessment proceedings. It is also observed that no quantitative details/stock records /purchase/sale records etc, are presented for verification till date. This leads to draw an inference that the company do not possess all the asked for documentary evidences which can prove that the Balance Sheet and P&L account le the final accounts reflects the true state of affairs, By this you are granted an opportunity to provide all asked for Page 13 of 107 A.Y. 2021-22 documents and furnish a detailed note on as to how do you consider that the books of accounts reflects the true state of affairs In case no details are made available and no suitable explanation being provided, you are requested to show cause as to why the Book results may not be considered may not be rejected under provisions of sec. 145(3) of the Act and the gross profit may not be estimated based upon GP rates disclosed by your own company during the AY 2019- 20 82020-21 which works out to 6.835% of turnover. However, the GP rate disclosed during the AY stands at 4.75%, accordingly you are requested to show cause as to why the Gross Profit worked ouf in absolute terms adopting differential rate of 2.085% (being 6.835-4.75) of turnover (Ra 685,74,76,950/-) which works out to Rs. 14,29,78,395/- may not be added back to your total income. 7.1 In response, the assessee company has vide response dated 25.11.2022 made a written reply which is reproduced herein below for an easy reference. Books of Accounts With reference to above, we beg to submit that we are a public listed company at BSE, Mumbai company is maintaining its Books of accounts and relevant records under most modem 'SAP' system, which is subject to internal audit, secretarial audit, statutory audit and cost audit for which elaborate accounts in term of value and quantities are maintained on day to day basis on year to year basis consistently and as such financial statements of the co have been prepared to comply with the Indian Accounting Standards (Ind AS) including rules notified under the companies Act 2013. Since now we have almost complied with the questionnaire issued u/s. 142 (1), We request your good self to kindly accept the books results and do not make any estimate based on Gross profit. In this regard we also want to submit that variations in day to day prices of Raw material and Oil prices, which is very well known and which is not in control of the company

Page 14 of 107 A.Y. 2021-22 In case of the manufacturing company it is yield of product which is significant and not G.P. we give following yield chart for 3 years from which it is quite evident that there is no fall in terms of production yield. Assessment Year % Yield 2021-2022 93.75% 2020-2021 92.66% 2019-2020 92.68% Above data is already reflected in TAR of concerned year. We therefore very humbly submit to kindly accept the book results The assessee company did not make available the following crucial information to avoid any verification and investigation and cleverly escaped the queries on the pretext of seeking adjournments. without providing any concrete reasons for doing so. The reply of the assessee company is considered but the same is not tenable in view of the following observations:

Page 15 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 16 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 17 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 18 of 107 Kriti Nutrients Ltd.

“7.5 It is of utmost importance to note that the assessee company's case was selected for scrutiny assessment in order to verify the veracity of Purchases recorded in the books of accounts. In fact, the CASS parameter which suggests the rationale and line of investigation mentions that "Assessee has made substantial purchases from such suppliers who are either Non Filer(s) or have filed non- business ITR or reflected a substantially lower turnover in Page 22 of 107 A.Y. 2021-22 ITR as compared to turnover shown in GSTR 1 return There is a possibility that assessee has booked bogus expenses in order to reduce its profit/taxable income. Therefore, the genuineness/correctness of expenses related with these entities may be verified. By not making available the details of sales/purchase parties and other quantitative details and seeking adjournment on one pretext or other, the assessee has cleverly dodged the investigation part of the assessment proceedings.”

The Ld. DR for the revenue then relied upon para 7.6,7.7, 7.8 & 7.9 of the “Impugned Assessment Order” which is reproduced below:-

“7.6 In view of the above discussion and the fact highlighted, it can be safely inferred that the Page 23 of 107 A.Y. 2021-22 3.7 The Ld. DR for the other additions made have relied upon para 8,8.1,8.2 for disallowance of Rs.60,63,000/- which was debited by the assessee company in the P/L account being the Page 24 of 107 3.8 With regard to addition of Rs.16,57,600/- basis para 9,9.1 & 9.2 of the “Impugned Assessment Order” it was submitted by the Ld. DR for the revenue that 20% of conveyance “expenses [Rs.14.90 lakh) & 20% travelling expenses” [Rs.67.98 lakh] which worked out to Rs.16,57,600/- disallowed is just, fair & equitable. The Ld. AO’s “Impugned Assessment Order” is just and equitably made.

3.9 With regard to disallowance of Rs.1,82,82,000/- the Ld. DR placed heavy reliance on para 10,10.1,10.2, 10.3, 10.4 of the “Impugned Assessment Order” which is reproduced below:-

[ no ledger, no note on nature of services rendered, no PAN details, no TDS deductions etc.]. Similarly, no details provided for “sales promotions expenses” [Rs.1,82,82,000/- rightly disallowed for want of any material information, documents etc].

Page 27 of 107 A.Y. 2021-22 3.10 with regard to addition of Rs.7,22,60,000/- the Ld. DR has relied upon para 11,11.1, 11.2, 11.3, 11.4 & 11.5 of the “Impugned Assessment Order” which is reproduced by me as follows;-

“11.1 As the assessee company was completely noncooperative since the beginning of the assessment proceedings, it was also issued an SCN vide DIN ITBA/AST/F/143(3)(SCNY20 22-23/1047502520(1) dated 18.11.2022, whereby it was requested to show cause as to why in absence of these details being furnished along with contra confirmations from selected creditors, all these liabilities may not be considered to be un-explained/non- existent and thus may not be disallowed and added back to the total income. 11.2 In response, the assessee company has vide response dated 25.11.2022 simply submitted that Details of Trade payable in desire format is under compilations-

Page 28 of 107 A.Y. 2021-22 11.3 It is noticed that till date the assessee company has not provided most of the basic details requisitioned vide notices issued, as early as dated 28.06.2022, 22.09.2022 and 03.10.2022 and seek adjournment on some pretext or other. The reply of the assessee company is considered but in view of the history of the assessee that, it keep seeking adjournment without providing any details, no adjournment is granted. 11.4 Till date, the assessee company failed to make available any details about the creditors, It failed to furnish the name & addresses, PANs of these creditors and any documentary evidences which can prove the genuineness of transactions carried with these parties. As such, the assessee has failed to discharge its primary responsibility. In absence of any details being made available by the assessee this assessment unit was deprived of any enquiries which could have been conducted on this issue. 11.5 Under such circumstances, there is no option left but to treat the entire sundry creditors as Un-explained / un- proved by the assessee. Accordingly, the full sum of Rs. 7,22,60,000/- is treated un-explained/un-disclosed income of the assessee company and is thus added back to its total income. Penalty proceedings u/s 270A of the Act for misreporting the particulars of income and u/s 271AAC(1) of the Act, are separately initiated on the issue. (Addition of Rs.7,2260,000/-)”

The Ld. DR has emphasized that no details, no material were furnished by the assessee company that Ld. AO has correctly passed the “Impugned Assessment Order”.

Page 29 of 107 A.Y. 2021-22 3.11 With regard to addition of Rs.4,46,630/- the Ld. DR submitted that this addition is not disputed by the revenue as the assessee company has accepted the variation. Revenue not in appeal.

3.12 The Ld. DR with regard to the “Impugned Order” interalia contended that the same is bad in law, illegal & not proper. The Ld. CIT(A) erred in law in passing the “Impugned Order”. The revenue is aggrieved of it & hence the Instant appeal before this Tribunal. The Ld. DR for the revenue submitted that the “Impugned Assessment Order” is rightly passed by the Ld. AO u/s 144/144B of the Act. The Ld. AO has given logical reasoning for invoking the provisions of section 144 of the Act & that since the assessee company was totally non-compliant the Ld. AO had no option left but to invoke his power u/s 144 of the Act in fact the Ld. CIT(A) ought to have upheld the “Impugned Assessment Order” and ought not to have partly allowed the appeal of the assessee company & in doing so on merits has erred in law. The documents, information, material etc. which were required to be filed as per law during the course of the assessment proceedings has come to be provided by the assessee company as & by way of Page 30 of 107 A.Y. 2021-22 additional evidence u/r 46A of the Income tax Rules 1962 which is an approach wholly untenable in law. The requirement of relevant information documents, material, evidences, etc are of pivotal importance during the course of the assessment proceedings there cannot be any kind of substitute in form of additional evidence u/s 46A before the Ld. CIT(A). In the instant case most surprising aspect is that all the information which were required at the original assessment proceedings have reached & has come to be filed as additional evidence u/r 46A which approach is not permissible in law. The Ld. DR for the revenue further submitted that the Ld. CIT(A) without appreciating the applicability of Rule 46A in its correct perspective has blindly accepted the plea of the assessee company u/r 46A. The purpose of Rule 46A is not appreciated at all in the “Impugned Order”. It was urged that Ld. CIT(A) failed to give sufficient time and reasonable opportunities to the Ld. AO to submit the remand report which required thorough verification of books & the additional evidences submitted by the assessee company before the Ld. CIT(A) while the Ld. AO has not filed the remand report within the meaning

Page 31 of 107 Rule 46A is statutory & mandatory in nature. Effective opportunity is required in meaningful manner. The Ld. CIT(A) ought not to have accepted the additional evidence & ought not to have taken into consideration while dealing with merits of the case within the meaning Rule 46A without a proper remand report from the Ld. AO. Further the Rule is no additional evidence can be admitted unless the Rule 46A is complied in the letter & in the spirit. The Ld. DR for the revenue in summation of his arguments has stated as under:-

(1) Only by product stated. With regard to main product nothing is stated anywhere. Turnover is questinable[P8] (2) There are reason main main product pricing. Hence scrutiny. (3) Turnover movements with no explanations. (4) confirmation letters[ xyclo styled[p10]]- escaped scrutiny (5) Table at P10 of Impugned Order cannot be accepted perse. (6) Six months time given by the ld. AO to comply still noncompliance by assessee company. (7) u/s 142(1) no details furnished by the assesee company. (8) Whatever even partly given by the assesee company during Assessment proceedings is not truth.

Page 32 of 107 A.Y. 2021-22 (9) Assessee company has circumvented scrutiny proceedings. (10) Full & Complete picture not provided to Ld. CIT(A) (11) Ld. CIT(A) has simply accepted the contention main product silence. (12) By products taken into consideration & main product - ignored. (13) No verification & due diligence done by Ld.CIT(A). (14) Impugned Order should be set aside.

3.13 Per Contra Ld. AR appearing for and on behalf of the Assessee Company has placed on record of this tribunal a paper book containing pages 1 to 113 and paper book-II pages 1 to 271.

It was submitted that page 2 & 3 of the Paper book which is a copy of letter dated 09.12.2022 the Annexures referred there in are not filed. It was then submitted that Kriti group mainly comprises of two company’s 1. Kriti industries 2.Kriti Nutrients Ltd. It was also submitted that there was a delay in reply due to sad demise of father of person in charge. Chief financial officer (CFO) had changed. A fresh person joined. Hence delay in compliances. There was no intention to delay. The Assessee Company in past had a chequered history with a lock down in the factory & No demand in the business. The Assessee

Page 33 of 107 Soya deoiled Cake Turnover was 178.28 Cr. [ Export 45.77%- less Export]. Total turnover was 685 Crores. Out of which 40 to 50% was of soya deoiled Cake. The Assessee Company is facing losses preceding two years. Oil business in profit. However profit is reduced due to export loss. The matter was part heard & was adjourned to 30.09.2025. On 30.09.2025 Ld. AR sought further time to clarify the facts & the matter was adjourned to 07.10.2025, as Part heard. On 07.10.2025 the Revenue sought “time to file copies of letters alongwith documents attached there to sent by the CIT (A) to AO to seek the Remand report & also to explain the reason as to why the Assessing Officer did not respond to the repeated letter sent by the CIT (A)”

On 10.11.2025 by letter No.CIT(DR)/ITAT [Ind/2025-26 dated 10.11.2025] the Ld. DR has placed on record of this tribunal a letter bearing No:- DCIT-1(1)/Ind/2025-26 dated 13.10.2025 of DCIT-1(1) Indore wherein following is averred “On Perusal of case history noting as available on ITBA remand report has been called for on 27.05.2024 & submission of the Assessee [Copy enclosed] along with enclosure attached therewith. Further

Page 34 of 107 “ As per information available on records no any letter has been received from the Ld. CIT(A) and remand report has been called for & reminder has been issued only through mail on ITBA.

Further, no detail for request for time extension is available in this case history noting. The reason for Non-submission of Remand report could not be given by undersigned as it is not available on Records. The copy of case history noting is enclosed for Ready reference.”

Encl;- Sd/- Dy CIT-1(1) Indore 3.14 Now we reproduce below the following which has come as enclosure to the above letter dated 13.10.2025 of DCIT-1(1)

Indore addressed to the Addl. CIT (Sr. DR) ITAT Indore (supra) (A)Order sheet – details Page 35 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 36 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 (B)Letter dated. 27.02.2024- PD Nagar & Co. Page 37 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 38 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 39 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 40 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 41 of 107 Kriti Nutrients Ltd. Page 42 of 107 Kriti Nutrients Ltd. A.Y. 2021-22 Page 43 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 44 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 45 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 46 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 47 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 48 of 107 Kriti Nutrients Ltd. ITA No. 780/Ind/2024 A.Y. 2021-22 Page 49 of 107 A.Y. 2021-22 Note:- The Ld. AR By the letter dated 07.10.2025 has once again submitted aforesaid letter dated 27.02.2024 with index from Sr. no. 1-16 which we reproduce as the Annexure A1 to Annexure P as below:-

Page 50 of 107 A.Y. 2021-22 3.15 The Ld. AR submitted that the remand report is not on record & there is no reason for non submission is given & put- forth as no information is available on record. There is no violation of Rule 46 A. The ld. AR has then placed on record of this Tribunal a letter dated 10.11.25 that on 28.06.2022 the portal was opened & was closed on 06.12.2022. Hence the Assessee company went to “grievance portal” on 09.12.2022, the requisite screen shots enclosed which we reproduce as below along with letter dated 10.11.2025.

A.Y. 2021-22 3.16 The Ld. AR for & on behalf of the Assessee then placed reliance on the synopsis [Page no.1 to12] dated 05.06.2025 in support of the contention of the Assessee company which is reproduced by me as under:-

01) “The respondent, a public limited company, is engaged in manufacturing of refined Soyabean Oil, DOC and Lecithin in its solvent plant including processing of crude oil into refined oil and sale thereof having its total turnover at Rs. 685.75 crores during the year. Return of income was filed on 14.03.2022 declaring the same at Rs.20,87,25,840/- which was processed by determining total income at Rs.20,94,62,720/-. Lateron, in response to notices u/s 142(1) of the Act submissions with documents were made on 22.10.2022 and 25.11.2022. Final opportunity was given to submit full response till 05.12.2022 but due to unavoidable bonafide reasons (sad demise of father of CFO) short adjournment of 6 days was sought i.e. upto 11.12.2022. The appellant tried to submit complete details on the I.T. Portal but failed because the tab of “submit response” was deactivated. Therefore, all details with annexures were submitted on 09.12.2022 itself on Grievance Portal with the request to give opportunity of being heard. (Copy annexed – Page 01 to 03 of P.B). The assessing authority did not consider the details furnished on Grievance Portal and vide order dated 19.12.2022 rejected book results by applying enhanced GP rate, adhoc disallowances of expenditure and trade payable considered as unexplained u/s 68 of the Act as under :- Ground Additions deleted by Ld. CIT(A) Amount disputed by Revenue No. 01& Application of GP @ 7.20% as Rs.16,77,57,242/- 02 against 4.75% on Turnover 03 Disallowance of sales promotion exp. Rs. 1,82,82,000/- & commission on sales (100%) 03 Disallowance out of traveling and Rs. 16,57,600/- conveyance exp. (1/5th) 04 Disallowance of foreign currency Rs. 60,63,000/- fluctuation loss 05 Trade payable treated as Rs. 7,22,60,000/- unexplained (100%) u/s 68 Rs.26,60,19,842/- Total 02) On appeal, detailed submissions along with documentary evidences were made which were considered by Ld. CIT(A) keeping in view the provisions contained in Rule 46A and deleted above additions against which the Revenue has preferred an appeal before your honours :- RESPONDENT’S SUBMISSIONS

I & II) Enhancement in Gross Profit u/s 145 of the Act : ₹ 16.77 crores 1.1) The appellant company is a Public Limited Company listed on BSE/NSE did maintain day to-day quantitative records of purchase/sale, production, opening and closing stock of raw materials, finished products by-products as well traded goods under most modern SAP System following Indian Accounting Standards (Ind AS).

The accounts are duly audited under the Companies Act by which are subject to internal audit, cost audit, secretarial audit and Tax audit under Income tax Act and verification at all levels by GST Department. Being Public Limited listed company quarterly, half yearly and annual results are published in newspapers and reported to SEBI, stock Exchanges showing comparative growth/decline. Purchases/expenditures incurred under various heads viz. professional charges, testing and analysis charges, advertisement etc. are properly supported by tax invoices, MTRs, e-way bills etc. and tax deducted at source by following statutory compliances in all respect. Assessments in earlier years were completed u/s 143(3)/143(1) of the Act as detailed below:- Asstt. Turnover & Income Income assessed Disallowance Order passed u/s Year (operating returned Revenue) 2015-16 Rs.310. 08.12 8.15 Cr. 2.56 lacs 143(3) 40 Cr. Cr. 2016-17 Rs.357. 08.28 8.33 Cr. 5.82 lacs 143(3) 92 Cr. Cr. 2017-18 Rs.457. 09.49 9.49 Cr. NIL 143 (1) 55 Cr. Cr. 2018-19 Rs.461. 23.53 23.53 Cr. NILafter 143 03 Cr. Cr. appeal (3)/250 2019-20 Rs.485. 25.23 25.23 Cr. NIL 143 (1) 22 Cr. Cr. 2020-21 Rs.520. 22.12 22.33 Cr. 21.31Lacs 143 04 Cr. Cr. (Education (3)/250 cess) 2021-22 Rs.685. 20.87 47.59 Cr. 26.72 Cr. u/s 144 75 Cr. Cr. under appeal 2022-23 Rs.751. 17.30 17.58 Cr. 0.19 lac 143(1)/250 01 Cr. Cr. 1.2) We submit that main reason for reduction in the gross profit was low demand through-out the World due to COVID-19 from 21st March 2020 onwards leading to lockdown measures through-out the Country as well abroad which resulted substantial reduction in export sales of Lecithin & De-oiled cake. The company was required to run the manufacturing unit under forced circumstances due to COVID-19 and effected sales of manufactured goods not only at low margin but even at a loss because market price of raw materials were increased i.e. crude oil from Rs.72/- per kg. to Rs.123/-per kg and of Soya seeds from Rs.40/- per kg. to Rs.59/- per kg during A.Y., 2021- 22 as per annexed details. (Page No. 04 to 09 of P.B). Contrary to this, statement showing reduction in sale price of domestic sales and export sales of lecithin and de-oiled cake during A.Y. 2020-21 and A.Y. 2021-22 were submitted. (Page 10 to 13 of Paper Book). It was thus proved that Page 55 of 107 A.Y. 2021-22 such reduction in sales realization on one hand and increase in cost of production on the other hand resulted into overall reduction of Gross Profit.

Comparative cost and selling price of two finished products of preceding two years are detailed below :- A. Lecithin sales : (Turnover Rs.19.62 Cr.) (Export 64.64%) Particulars A.Y.2019-20 A.Y. 2020-21 A.Y. 2021-22 Rate/Kg Rate/Kg Rate/Kg Turnover of Lecithin / 31.99 Cr. / 28.28 Cr. / 19.62 Cr. / Export 25.10 Cr. 22.63 Cr. 12.68 Cr. Cost of Production of 57.12 lecithin 53.08 80.23 Average Selling Price 144.36 138.14 108.92 Absolute earnings( Rs) 91.28 81.02 28.69 Qty sold ( In MT) 2138 1950 1715 Margin earned ( Rs in 15.80 crs) 19.52 4.92 Profit Margin on sales 58.65% (%) 63.23% 26.34% Increased cost and reduction in sale price & turnover reduced gross profit

B. Soya De-oiled cake: (Turnover Rs.178.28 Cr.) (Export 45.77%) A.Y. 2020- A.Y. 2021- Particulars A.Y.2019-20 21 22 Rate/Kg Rate/Kg Rate/Kg Total Turnover of Soya 111.09 Cr. 104.13 Cr. 178.28 Cr. DOC Cost of Soya seed 35.17 38.50 44.04 Selling Price of soya DOC 33.25 35.39 39.28 Absolute earnings( Rs) -1.92 -3.11 -4.76 Qty sold ( In MT) 30679 26990 42779 Margin earned ( Rs in crs) (-)5.88 (-)8.40 (-)20.37 Cr. Margin %age -5.76% -8.79% -12.12% Increase in gross loss as compared to A.Y. 2020-21 (20.37 – 8.40) = 11.97 cr. We submit that reduction in gross profit on sales of lecithin, and loss suffered in de-oiled cake was compensated by better profit earned on sale of refined oil and by controlling various overheads expenditure.

Page 56 of 107 A.Y. 2021-22 1.3) It was submitted to the AO that the yield of finished products manufactured during the year was better than immediately preceding two years as reported in para (35-b) of Tax Audit Report but profitability was substantially reduced due to circumstances beyond control (COVID-19) duly referred by him at Page-7 of the assessment order. Thus, past history of the appellant reveals that book results were accepted all along considering increased turnover with excellent working. Just because Portal was deactivated and compliance made on Grievance Portal by the appellant was overlooked, the assessment order was passed by rejection of book results. 1.4) Reasons for rejection of book results were mentioned by the AO at page 8 to 14 vide para 7.1 to 7.5 of Assessment Order. The explanations given by the company as to discrepancies stated in the assessment order stating aforesaid reasons for i.e. fall in market prices of finished goods have been reproduced vide paras 6.2 to 6.8 at page 8 to 18 of CIT(A)’s order, yet briefly repeated here under for ready reference :-

Reasons as stated in Explanation/documents submitted assessment order : on Grievance Portal as well before CIT(A) i) Para7.1 at page 8 : Despite In fact, due to change of main accounts the implementation of SAP, the staff partial submissions were made company requested for hence one more opportunity was adjournments, thus requested on 02.12.2022 which was not deliberately delayed the granted. Such details were submitted providing of confirmations of on grievance portal on 09.12.2022 suppliers (trade payable). including confirmation certificates proves that there was no deliberate attempt to delay the proceedings. ii) Para7.1 at page 9 : Details Besides the effect of COVID-19, the regarding variation in day-to- market prices of soya seed depends day prices of raw materials upon the crop whereas selling price of and oil price which adversely finished goods depends upon import of resulted into fall in gross profit oil in the Country and export demand of were not submitted. DOC/Lecithin. Details of day-to-day market price of refined oil, crude oil and soya seed were submitted on 09.12.2022 and before CIT(A), which are annexed. (Page No. 04 to 09 of PB) Para 7.3 at page 9 & 10 : All suppliers of raw materials and Details of party-wise purchases distributors are Income tax assessees & sales and address were not having PAN. Details of party-wise sales made available. were submitted on 09.12.2022 & (₹ 637.98 crores) before CIT(A) which are annexed. (Page No. 14 to 17 of PB) Para 7.3 at Page 10 : Copies of Such details were submitted on all expenditure under Grievance Portal on 09.12.2022 and different heads aggregating before CIT(A) as evident from page no. over Rs.10.00 lacs not furnished 01 to 03 of Paper Book.

Page 57 of 107 A.Y. 2021-22 Para7.3 at page 10 : Month- The company maintained day-to-day wise quantitative details of quantitative records raw materials, raw materials consumed and finished goods etc. Month-wise products manufactured were not quantitative details of consumption of raw materials on submitted with its yield %. were submitted 09.12.2022 and again annexed. (Page No. 18 of PB). Finished goods manufactured and percentage yield thereof was already reported in TAR Para7.3 at page 10 : The suppliers allowed normal credit of Confirmation certificates with 30-45 days hence payments outstanding name, addresses and PAN of on 31.03.2021 were made in creditors disclosed as “Trade April/May2021.Confirmation Payables” exceeding Rs.5.00 certificates of major suppliers were lacs were not furnished. (₹ submitted on 09.12.2022 are 722.60 lacs) annexed. (Page No.19 to 33 of PB) Para 7.4 – A, Page 10 & 11 of It was clerical mistake occurred due AO Related party to new account’s staff who handled tax : transactions submitted by the matters, which was regretted. He had company were completely in uploaded related party transactions contradiction with the figures from TAR of associate public limited reported in TAR as well does not company viz. M/s. Kriti Industries corroborates with this figures India Ltd in place of M/s. Kriti disclosed in the final accounts. Nutrients Ltd’s TAR was clarified to Ld.CIT(A). (Page 74 to 77 of P.B) Para 7.4-B, Page 11 & 12 of Directors remuneration & commission AO : Mismatch in directors paid was disclosed in Column 23 of remuneration debited in P & L Form 3CD whereas in the Balance sheet A/c with TAR. closing balance was stated. The commission payable to director was shown separately and the same was not merged under the head “Brokerage & Commission” in P & L A/c. Para 7.4-C, Page 12 of AO : Payment to contractors for casual labour Mismatch of column 34(a) of Form disclosed in accounts at Rs.49,85,905/- 3CD (TAR) with reference to under the head “Loading unloading employees benefit expenses Exp.” which was merged while reporting debited in P & L A/c. TDS compliance in Cl. 34(a) of TAR hence reconciled. (Page No. 34 to 39 of PB) Para – 7.4D, Page 13 & 14 of It was explained that quantitative AO : The quantitative details of details of opening and closing stock of opening and closing stock of raw raw materials and finished goods was materials, semi-finished goods fully reconciled. Quantity of refined oil is and finished goods submitted but reported in metric ton but the accounts that they do not reconcile with staff submitted the quantitative details the Tax Audit Report and of refined oil packed in small pouches Balance sheet. of 200 ml, 500 ml, 1 kg, 5 kg and 15 kg without its conversion into MT before AO. (Page No. 40 & 41 of PB)

Page 58 of 107 A.Y. 2021-22 Para 7.5 of the assessment In fact, the purchases were effected from order : The AO considered CASS the suppliers who are duly registered Parameters which suggest the under GST Act who uploaded details of rational and line of Investigation sales effected by them to the appellant i.e. possibility of booking of in monthly returns under GST Law. bogus expenses in order to Such presumption of bogus reduce the profit/taxable purchases without any evidence income hence concluded that the cannot be a basis for rejection of company avoided the books of account. Investigation during asstt. proceedings.

1.5) The assessing authority vide Para 7.8 and 7.9 at page 15 of Assessment order applied gross profit rate of 7.20% being average gross profit earned in preceding three years viz. A.Y. 2018-19 (7.92%), 2019-20 (7.71%) & 2020-21(5.96%) based on above observations as against gross profit earned at 4.75% on total turnover of Rs.685.75 cores during A.Y. 2021-22. We submit that in plethora of judgments, principles have been laid down that while making the assessment, the Income-tax Officer is not entitled to make a pure guess without reference to any evidence or material. There must be something more than a mere suspicion to support any enhancement to the total income in the assessment. Reliance is placed on following judgments: Citation Gist of judgment State of Kerala vs. C. Held that though there is an element of guesswork in a "best judgment assessment". it should not be a wild Velukutty (1996) 60 one, but should have reasonable nexus to the ITR (SC) available material and the circumstances in each case. Though the section provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard to the available material, Shri Suresh Chand Held that “"Sec. 145 would be attracted only to a Talera vs. CIT (2006) case where either the accounts are not correct 282 ITR 341 (MP) or complete to the satisfaction of AO or the method employed is such that in the opinion of the AC the income of the assesse could not be properly deduced from such accounts maintained the assessee.” (At page 345). CIT vs. K. S. Bhatia It was held that the mere fact that the profits are (2004) 269 ITR 577 low compared to earlier years is not sufficient (P&H), to make an estimate of net profits,"" GVDI vs. DCIT (2014) Held that “when assessee explained reasons for 226 taxman 16 (Mad.) fall in G.P and revenue did not verify same by substantial materials, impugned order of the AO was to be set-aside”. CIT vs. Paradise Held “The accounts which are regularly Holidays (2010) 325 maintained in the course of business and are duly ITR 13 (Del. HC) audited, free from any qualification by the auditors, should normally be taken as correct

Page 59 of 107 A.Y. 2021-22 unless there are adequate reasons to indicate that they are incorrect or unreliable”. CIT vs. Vikram Held, " that there was no material brought on Plastics (1999) 239 record to establish that purchases or expenses ITR 161 (Guj.) were inflated or sales suppressed, the Tribunal was fully justified in coming to the conclusion that the provisions of section 145(2) could not be invoked,". CIT vs. Anand Kumar Held that “addition made after rejecting books Modi (2015) 2 ITJ maintained by assessee should be deleted when Online 668 all quantitative details were available in hooks (Jharkhand) of account and account and accounts were regularly maintained”. Pr. Commissioner of Held “Any pick and choose method of rejecting Income tax vs. Forum certain entries from the books of account while Sales Pvt. Ltd (2024) accepting others without appropriate justification, is 468 ITR 392 (Del) at arbitrary and may lead to an incomplete 403 unreasonable and erroneous computation of income of an assessee – (Para-24)

1.6) In substance, reasons for reduction in the gross profit were manifold such as :- (a) effect of COVID-19 during entire year which adversely resulted not only the working of the manufacturing activity but also substantial decrease in export turnover (b) Substantial increase in the raw material price due to insufficient crop of soyabean from Rs.40/- per kg. to Rs.59/- per kg, (c) substantial decrease in export realization of manufactured goods i.e. de- oiled cake and lecithin due to COVID-19. (d) Import of degum oil from outside India for refining at a higher cost, (e) Increased cost of manufacturing due to partial closed down of factory and absence of workers during COVID-19, (f) Increased logistic cost on finished goods within India etc. etc. 1.7) The company submitted detailed statements showing proper quantitative reconciliation of raw materials, finished goods and semi-finished goods with Balance sheet and Tax Audit Reports and proved beyond doubt that there was no defect whatsoever in the accounts. In view of submissions made above, there was no justification to reject books of accounts and apply gross profit rate of 7.20% on total turnover of Rs.685.75 crores, hence addition of Rs.16.77 crores being wholly unjustified and arbitrary was correctly deleted by Ld. CIT(A). III) a) Disallowance of Sales Promotion Expenses : ₹ 182.80 lacs The appellant company is engaged in manufacturing and sale of consumer product i.e. edible oils hence it is required to incur reasonable expenditure which were grouped under the head “sales promotion expenses” which were comparable to preceding years’ expenses comprises of following :-

S.No. Account head A.Y. 2021-22 A.Y. 2020-21 A.Y. 2019-20 Page No. of PB 01) Total turnover Rs.685.75 Cr. Rs.515.08 Cr Rs. 478.04 Cr - 02) Advertisement and Rs.45.40 lacs 34.08 lacs 10.01 lacs 42 publicity

Page 60 of 107 A.Y. 2021-22 03) Testing and Rs.58.10 lacs Rs. 61.95 lacs 56.76 lacs 43 analysis 04) Branding Expenses Rs. 68.84 lacs 39.12 lacs 5.72 lacs 44 to 52 05) Brokerage & Rs. 10.48 lacs 10.80 lacs 9.59 lacs 53 & 54 Commission Total Rs.182.80 lacs Rs.145.55 lacs Rs.143.67 lacs

The Assessing Officer vide para 10 to 10.4 at page 17 & 18 of assessment order disallowed 100% expenditure incurred under above heads duly supported by documentary evidences, on the ground that the company did not provide the details. We repeat that complete details were submitted on Grievance Portal on 09.12.2022 i.e. much before the assessment order passed on 19.12.2022, which were not considered by him hence submitted before CIT(A) along with comparative details. Such expenditure were wholly and exclusively incurred for the purpose of business having no element of personal expenses as contemplated u/s 37 of the Act. Kindly appreciated that total turnover of the company was increased by 33% hence increase in aforesaid expenses did commensurate with such increased turnover. Just because submission of details were delayed by four days, the AO disallowed entire 100% expenses as if they were incurred for non-business purposes. Such disallowance of Rs.182.80 lacs i.e. 100% was arbitrary and based on whims and surmises hence rightly deleted by Ld. CIT(A) vide para 9.1 at page 26 and 27 of appellate order. Disallowance out of Travelling & Conveyance Expenses ₹ 16.57 b) lacs : We submit that the nature of business of the company’s turnover of Rs.685.75 crores solely depends upon continuous traveling by marketing team. Due to COVID-19 directors travelling (domestic as well foreign) was Rs.0.37 lacs only and staff travelling and conveyance were at par or rather less then earlier years as per comparative details of preceding three years, as detailed below, though turnover was increased by 33% from previous year’s turnover A.Y. 2021-22 S.No. Account head A.Y. 2020-21 A.Y. 2019-20 01) Domestic (staff) 82.50 lacs 102.13 lacs 81.80 lacs 02) Domestic 0.37 lacs 9.21 lacs 3.97 lacs (Directors) 0.00 lacs 03) Foreign travelling 10.48 lacs 18.61 lacs (staff) TOTAL 82.87 lacs 121.82 lacs 104.38 lacs

Details of travelling expenses of Rs. 82.50 lacs incurred by staff during A.Y. 2021-22 i.e. under appeal were submitted on the Portal on 09.12.2022 and before CIT(A) are annexed (Page no. 55 to 57 of PB). The AO disallowed vide para 9 to 9.2 at page 16 & 17 of assessment order an amount equal to 20% on adhoc basis i.e. Rs.16.57 lacs. // 8 // It is settled law that additions cannot be made on the basis of surmises and conjectures as held by the Apex Court in case of Dhakeshwari Cotton Mills Ltd vs. CIT (1954) 26 ITR 775 (SC). Therefore, adhoc disallowances of 100% expenses under the head “Sale promotion expenses”, brokerage and Page 61 of 107 A.Y. 2021-22 commission and 1/5th travelling expenses in adhoc manner without stating any specific instance or any cogent evidence is arbitrary and bad in law hence Ld. CIT(A) vide para 8.1 to 8.4 at page 24 & 25 of the order rightly deleted such disallowances. In support, reliance is placed on following judgments :- a) ACIT vs. Keti Construction Ltd ITANo.329/Ind/2022 order dt. 30.05.2023(Trib.Ind) Confirmed by High Court in CIT vs. Keti Construction (P) Ltd (2025) 475 ITR 182 at page 194 (MP) In this case, adhoc disallowances @ 10% was made by the AO out of operating expenses, cost of material consumed, employees benefit and other expenses debited to profit and loss account at Rs.3,79,85,854/- was deleted by Hon’ble Tribunal and confirmed by their Lordships of High Court vide para 19 and 20 of the order. [Copies of orders annexed] b) M/s. Vision Infinity Ltd vs.ACIT (2025) 54 ITJ 38 (Trib.Indore) (copy annexed) a) ACIT vs. Synergy Media Entertainment Ltd (2015) 26 ITJ 758 (Trib.Indore) b) DCIT vs. Agrawal Transport Corpn. Pvt.Ltd (2016) 27 ITJ 21 (Trib.Indore) c) Alkoplus Producers P. Ltd. vs. DCIT (2019) 177 ITD 150 (Trib. Pune) d) Asstt.CIT vs. Shree Sai Vihar (2016) 28 ITJ 158 (Trib.Raipur) e) Waidhan Engg. & Industries P. Ltd vs. JCIT (2015) 26 ITJ 505 (Trib.Jabalpur) (IV) Disallowance of Foreign Currency Fluctuation loss : ₹ 60,63,000/- We submit that export sale invoices raised by the Co. are either discounted by the bank or realized against Letter of Credit opened by buyers & accounted for based on prevailing Foreign Currency rate. Its realization through banks is after the credit period of 3 to 4 months hence any variation in the exchange rate of dollar results either loss or gain to the Co. Similarly, in case of import, purchase invoices are accounted for in the books at the time of arrival of goods purchased based on exchange rate of Dollar into INR but while making payment on due dates, there may be loss or gain which is business loss or business income recognized under the Act. It is obligatory for the company to consider the foreign exchange fluctuation (gain/loss) even on the amount due from export debtors at the close of the year as per IND-AS. Increase in dollar exchange rate is considered as accrued gain of the year of sale and provided as income and in case of adverse price fluctuation, loss is provided and charged

Page 62 of 107 A.Y. 2021-22 to profit and loss account. Next year, such provision made on closing balances due from debtors is reversed and actual gain on sales realization is credited to profit and loss account. During the year, on the amounts due from foreign customers as on 31.03.2021, similar provision was made as accrued income at Rs.20,18,254/- which proves the consistency of accounting policy. The company had provided for a sum of Rs.60.63 lacs as accrued income on outstanding dues from export debtors in A.Y. 2020-21 which was reversed in year under appeal i.e. A.Y 2021-22 and charged to profit and loss account vide note no. 34.22 of the Audited Balance sheet which was allowable expenditure. The appellant company separately accounted for income and losses under different heads and disclosed in the audited profit and loss accounts as under :- a) Note no. 34.22 “Net loss due to currency fluctuation”- Provision reversed Rs.60.63 lacs b) Note No. 29.9 “Profit due to currency fluctuation – “Other income” Rs.50.84 lacs Net loss due to in foreign exchange fluctuation Rs.9.79 lacs The assessing officer vide para 8 to 8.2 at page 15 & 16 of assessment order had disallowed at Rs.60.63 lacs due to reversal of income as stated above debited in profit & loss account on the ground that detailed copy of account was not submitted by the Co. In fact no loss was incurred due to Foreign exchange fluctuation and just because of reversal of income already offered in earlier year such amount was separately disclosed in profit and loss account. Disallowance of such reversal entry resulted into double taxation. The company in fact earned net gain on foreign exchange fluctuation of Rs.50.84 lacs offered for tax as per annexed details which was ignored by the AO. (Page No. 58 to 65 of PB). The disallowance made by AO was therefore correctly deleted by Ld. CIT(A) vide para 7.1 to 7.3 at page 20 to 23 of appellate order. V) Unexplained Trade payable ₹ 722.60 lacs u/s 68of the Act :- We submit that amount payable to suppliers of goods & services which remained outstanding at the close of the year at ₹ 722.60 lacs was treated by the A.O. as unexplained/un-proved though they were paid within credit period

Page 63 of 107 A.Y. 2021-22 permissible as per normal Trade Practice. PAN of all suppliers along with balance confirmation of 14 creditors having outstanding over Rs.5.00 lacs were submitted on Grievance Portal on 09.12.2022 but not considered by AO which were submitted before CIT(A) and annexed herewith. (Page No. 66 to 73 of PB). Trade creditors were paid in April/May 2021 itself and all of them are duly registered under GST Act, and assessed to income tax. They were regular suppliers of goods to the company and not in the nature of unsecured loans yet deeming provisions of section 68 of the Act were invoked by the AO which proves arbitrariness. None of such creditors were outstanding for a period of more than three years hence even provisions of section 41(1) were not applicable. Without considering nature of business and audited accounts maintained by the company and details of payments made in next month itself to many suppliers, amounts payable to all creditors were assessed to tax u/s 68 of the Act at Rs.722.60 lacs as unproved/unexplained r.w.s. 115BBE of the Act vide para 11 to 11.5 at page 18 & 19 of assessment order.

Such treatment of trade payables as unexplained cash credit u/s 68 of the Act without any evidence on record was wholly unjustified and bad in law hence deleted by Ld. CIT(A) vide para 10.1 & 10.2 at page 27 & 28 of the appellate order. VI) Additional evidences - Remand Report under Rule 46A We submit that in response to notices u/s 142(1) of the Act, admittedly partial response were submitted on 22.10.2022 and 25.11.2022 by the company. Final opportunity was given by AO directing full response to be made on 05.12.2022 but the company had requested for short adjournment of six days only i.e. upto 11.12.2022 because the father of CFO had expired on 21.11.2022. Thereafter, the appellant compiled all annexures with details and tried to submit the details on I.T. Portal on 09.12.2022 i.e. within four days. Such details could not be uploaded on I.T. Portal on 09.12.2022 because the tab of “submit response” was deactivated by the AO which was in violation of natural justice. The company therefore, submitted all details on same day i.e. 09.12.2022 on Grievance Portal with an apology for inconvenience caused due to delay as per copy of acknowledgment of Grievance Portal with covering letter annexed at page no.01 to 03 of P.B. Kind attention is invited to Para 4.4 of the appellant order passed by Ld. CIT(A) from which it is evident that he had directed the AO to submit remand report by forwarding the submissions of the appellant on 27.05.2024 and subsequent reminders on 14.06.2024 and again on 01.08.2024. Even thereafter, till 06.09.2024 the remand report was not forwarded by AO to him hence he presumed that the AO has no comments to offer on the submission of additional evidence of the appellant. Vide Para 4.5 Ld. CIT(A) considered the fact of submissions made by the appellant on Grievance Portal on 09.12.2022 and accepted that the appellant was prevented by the sufficient cause from producing the evidence before the AO yet the assessment order was passed u/s 144 of the Act on 19.12.2022 ignoring details submitted on Grievance Portal on 09.12.2022 without giving proper opportunity of being heard to the appellant by not granting short adjournment upto 11.12.2022. In fact, all evidences submitted before

Page 64 of 107 A.Y. 2021-22 CIT(A) were made available to the AO and he was supposed to have referred to Grievance Portal before passing the Assessment Order. We submit that Ld. CIT(A) had in fact considered that the appellant is prevented due to sufficient cause and before admission of the evidences he had forwarded all documentary evidences to AO to submit remand report. He passed the appellate order after giving sufficient time to AO i.e. more than three months by repeated reminders hence requirements of Rule 46A(1)(2)(3) were complied with by CIT(A), reproduced hereunder :-

“46A. (1) The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case maybe, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely : (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.

(2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] or, as the case maybe, the Commissioner (Appeals) records in writing the reasons for its admission. (3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity(a) to examine the evidence or document or to cross- examine the witness produced by the appellant, or(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant”.

We, therefore, submit that there was no violation of Rule 46A by Ld. CIT(A) in accepting the additional evidences submitted during appellate proceedings because most of them were submitted before AO and balance on Grievance Portal much before assessment order was passed. Kind attention is invited to following judgements relating to powers of CIT(A) with reference to Rule 46A:- a) CIT vs. Imperial Cables Pvt. Ltd (2007) 159 Taxman 328 (Delhi) [Copy annexed] Held “CIT(A) is justified in allowing the addl. evidences under Rule 46A where the AO has not responded to the repeated reminders by the CIT(A) to submit his report. b) Asstt. Com. of Income Tax vs. Keti Construction Ltd. (ITA No. 329/Ind/2022) Order dated 30.05.2023 (Trib. Indore) - [Copy annexed] Held “The AO has not controverted these facts, records and considered by the Ld. CIT(A) while deleting addition even the AO was given an opportunity of Page 65 of 107 A.Y. 2021-22 verification and examination of additional evidence but the same was not availed by the AO. Hence in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the Ld. CIT(A) same is upheld” (Para-12 of ITAT’s order). Hon’ble MP High Court affirmed above in (2025) 475 ITR 182 (MP). c) CIT vs. Better ways Finance & Leasing Pvt. Ltd (2011) 62 DTR 282 (Delhi) Held that “Admission of additional evidence is within the discretion of the Commissioner (Appeals) on the facts the said discretion has not been exercised improperly or against the provisions of law. CIT(A) was justified in admitting the additional evidence. (Copy annexed). d) CIT vs. Suretech Hospital & Research Center Ltd (2007) 293 ITR 53 (Bombay) Held “Rule 46A(4) provides that notwithstanding Rule 46A(1), the appellate authority can permit production of documents which enables him to dispose of the appeal. e) CIT vs. Jind Co-operative Sugar Mills Ltd (2011) 335 ITR 43 (P & H) Held “When the assesse files additional evidence before CIT(A), it is not necessary that the CIT(A) must remand the matter to the Assessing Officer, it depends on the nature of the evidence. The CIT(A) in appropriate case without prejudice to either parties can look into the evidence itself”. f)DCIT vs. Maa Umiya Agritech Pvt. Ltd (2023) 47 ITJ 497 (Trib.Indore) Held that “AO misconducted himself while passing the assessment order and therefore the record which was already filed before the AO was rightly considering by CIT(A) – therefore, there is no violation of Rule 46A – ITAT does not find any error or illegality in the order of CIT(A)”.

3.17 From the records it is seen that the Ld. AR for & on behalf of the Assessee company had vide submission [pages 1 to 23]dated 05.06.2025 had relied upon the following judgments the index of which is reproduced by me as below:-

Page 66 of 107 3.18 From the record it is seen that the Ld. AR for & on behalf of the Assessee company vide submission dated 29.09.2025 [page 1 to 2] has placed on record following distinguishable facts in relation to judgments relied upon by the Revenue which is reproduced by me as below:-

3.19 In so far as the Ld. DR for the Revenue is concerned the Dept. has placed on Record of this Tribunal a letter bearing No:-

CIT (DR)/ITAT/Ind/2025-26 dated 30.09.2025- which is reproduced by me as under:-

Page 70 of 107 A.Y. 2021-22 Assessing Officer the Remand report. The Impugned Order was passed on 06.09.2024 without the Remand Report. Sufficient opportunity was not provided to the Ld. AO u/r 46A(3). The time frame was short to submit a remand report. The remand/process requires time for thorough verification of books & additional evidence submitted by the assessee before the Ld. CIT(A).

The Summation of Rejoinder is as follows:-

(1) Revenue has stated all facts earlier.

(2)Sufficient time of compliance was given to Assessee for Six months by the AO.

(3)It transpires that some other entity papers were filed. (4)No basic details were furnished during original Assessment Proceedings.

(5)The Learned CIT (A) has carried out his own analysis of papers/documents/material.

(6)No details were provided by the assessee to Ld. Assessing

Officer for verification due diligence, inquiry etc.

(7)The Assessee was aware of Assessment procedure including the fact that Assessments are time barring in nature.

Medical sickness in family of concerned officers/ officials are excuses as Assessee is a big corporate Assessee.

Assessee is having “SAP system” so information is all well tabulated why it was not parted to Dept. is surprising.

(9) CIT (A) called for Remand report on Additional evidence & Ld. Assessing Officer could not provide the same. (10) The Assessing Officer could not carry out due verification

& the Learned CIT (A) simply accepted the Assessee company’s approach & the documents. No verification was done by CIT

(A) of evidences produced as additional evidence.

(11) Major Product is refined oil. Turnover has increased. Yield has increased. Normally GP should increase but GP has declined. Once again main Product & by Product of Assesses’s company were spoken about Soya oil main product-. Soya cake/Deo not major Product.

(12) The Ld. DR also stated that- there is a mistake on part of the Assessing Officer in not submitting the Remand report however in the interest of Justice, the Verification, the Cross

Page 72 of 107 A.Y. 2021-22 verification, due diligence, enquiry of the papers, documents, information, material provided is a must in order to compute and assess the total income of the assessee exigible to tax. Per contra the Ld. AR submitted that –the Portal was closed intentionally as Ld. Assessing Officer wanted to make a high pitched Assessment. The Ld. DR further added by submitting that the Ld. Assessing Officer is having many cases in hand & whatever details were called were basic details only the Ld. AR stated only. The Ld. AR stated about covid & time delay.

Hearing was then concluded.

4.2 We have minutely perused the records of the case & have heard the rival submission of both the revenue as well as the assessee company.

Page 73 of 107 A.Y. 2021-22 4.3 We basis records of the case and after hearing and upon examining the rival contentions is of the considered view & opinion that firstly & fore mostly the “Impugned Assessment Order” of the Ld. AO is under section 144 r.w.s 144/B of the Act whereby the total assessed income computed and the assessed is at Rs.47,59,29,192/- against the returned income of Rs.20,87,25,840/-. The facts & circumstances which led the Ld.

AO to pass the “Impugned Assessment Order” is narrated by us in the factual matrix drawn up by us (supra). there was infact part compliance by the assessee company which facts is recorded by the Ld. AO in para 4 (Table) of the “Impugned Assessment Order” at serial No.-(3) & (6) at majority of the time as is reflected in the Assessment Order that during the course of the assessment proceedings which got triggered with a notice u/s 143(2) of the Act on 28.06.2022 till the date of the “Impugned Assessment Order” which is dated 19.12.2022 the assessee company has remained non-compliant for the one reason or more. We are of the opinion and view that in the original assessment proceedings that too selected for “scrutiny” under “CASS” it is but incumbent upon the assessee company to Page 74 of 107 A.Y. 2021-22 furnish to the Ld. AO whatever is sought & requisitioned by him “within a reasonable period of time” needless to state that the original assessment proceedings [ scrutiny assessment] are subjected to the time limitation. The Ld. AO while carrying out the assessment proceedings seeks the informations, the requisite documents, materials, the evidences, books of accounts, audit report, balance sheet, the computation of the income, the bank statements, sundry debtors & creditors-lists, loans, unsecured loans, details of depreciation, the turnover, the product line, the profit margine, G.P. rates confirmation, the details about expenditures, income so on & so fourth including deductions claimed so that he can compute & assess the total income of the assessee exigible to tax, as no tax can be levied & collected save & except according to law. The Ld. AO in the original assessment Proceedings” makes the inquiry, verification, cross verification, investigation, appraises the evidences etc. with a view to correctly compute & assess the total income of the assessee basis the return of the income filed by the assessee. The assessee do not file the return of income blindly or carelessly particularly the present assessee company who besides being a “body corporate”

Page 75 of 107 A.Y. 2021-22 is also a listed company on “stock exchange of India”. The revenue expects besides other regulatory bodies like SEBI, Stock, exchanges, financial institutions, etc. that such body corporate should be a good corporate citizen, so that our economy & nation usher’s into a New Dawn & the legitimate revenue as per law are collected by the exchequer. The fundamental rule which is valid in all the branches of law, including the income tax law is that the assesee should adduce the entire evidence in his possession at the earliest point of time. This ensures full enquiry & verification. It is a essential condition precedent for just, fair adjudication & adjudgement.

4.4 Moving forward since the “Impugned Assessment Order” of the Ld. AO was against the assessee company as additions were made, the same was challenged by them by filing a “first statutory appeal u/s 246A” of the Act which is a matter of right of the assessee company under the Act. The “first appeal” came to be filed in the form 35 which is a statutory form of the first appeal before the Ld. CIT(A) on 29.12.2022 bearing Ack. No;- 882667170291222. The first appeal was filed within 10days, from the date of the “Impugned Assessment Order”.

Page 76 of 107 4.6 In column No.11 the statement of facts in brief reads as under:-

“01) The appellant is engaged in manufacturing and sales of Soyabean Oil and DOC in its solvent plant situated at Dewas (MP). Purchases are being effected from registered dealers of MP as well from outside the State. Regular books of accounts are maintained. The company is also engaged in trading and sale of refined oil during the year and its total turnover Rs. 685.75 crores. The purchases/expenditure under various heads are properly supported by bills, MTRs, traveling bills etc. whereas on professional charges, testing and analysis charges, advertisement etc. TDS has also been made as reported in Tax Audit Report. There being continuous growth in the turnover year after year, expenditure were incurred genuinely and they are proportionate to the expenditure incurred in the earlier year as evident from the previous year(s) expenses narrated in the profit and loss account itself. Assessment orders in earlier years were also completed u/s 143(3) of the Act and considering the proper maintenance of accounts, book results were accepted.

02) The appellant furnished the return of income within prescribed time limit under section 139(1) of the Act on 14.03.2022 declaring the same at Rs.20,87,25,840/-. The return was processed u/s 143(1) of the Act by CPC determining total income at Rs.20,94,62,720/-by making addition of Rs.4,46,360/-towards delayed payment of P.F. and ESIC and Rs.2,90,525/-being payment of leave encashment paid before due date of return, which are subjudice in appeal. Thereafter, the return was selected for scrutiny under CASS and due to partial compliance of notices u/s 142(1) of the Act, order u/s 144 read with Section 1448 of the Act was passed on 19.12.2022 determining total income at Rs.47,59,29,192/-thereby addition of Rs.26.65 crores as under a) By application of average gross profit rate of 7.20 percent on Turnover Rs. 16,77,57,242/-1 b) Disallowance of foreign currency fluctuation loss. Rs. 60,63,000/- c) Disallowance out of traveling and conveyance expenses. (1/5th) Rs. 16,57,600/-

Page 77 of 107 A.Y. 2021-22 d) Disallowance of sales promotion expenses and brokerage/commission Rs.1,82,82,000/; e) Amount due to sundry creditors treated as unexplained (100 percent) Rs.7,22,60,000/-: f) Delayed payment of PF & ESIC Rs.4,46,360/- Total addition to returned income Rs.26,64,66,202/- 03) Admittedly, in response to notices u/s 142(1) of the Act and show cause notice thereafter, partial response were submitted on 22.10.2022 and 25.11.2022 by the Accountant of the company.At the outset, such non-compliance was due to irresponsible attitude of the new staff member appointed during the year to handle tax matters who submitted incorrect details from the audited accounts of associate Pubic Limited Company. Such submissions not only resulted into mismatch of figures of Profit and Loss account, inventories etc. for the year under assessment but also resulted aforesaid additions which adversely effected the credentiality of the appellant company who had always been co-operative in prompt compliance of the notices issued by the Tax Department in early years. As regards fin opportunity vide notice dated 01.12.2022, the submissions were required to be made on 05.12.2022. A request was made immediately on 02.12.2022 to grant short adjournment upto 11.12.2022 only because the father of the Manager (Taxation) had expired on 21.11.2022 and she was unable to attend till 05.12.2022. Such request was not looked into and by observing that there was no response by the appellant company in the assessment order.. In fact, the appellant tried to submit complete required details on the Portal on 09.12.2022 but the same was closed by the AO hence such details were uploaded in seven Annexures (270 Pages) on GRIEVANCE PORTAL on 09.12.2022 itself that is much before the order passed under section 144 of the Act on 19.12.2022. There had never been any such occasion resulting into exparte assessment due to bonafide reasons stated above.”

4.7 In the column No.11- the list of documentary evidence relied upon the following is stated in the form no.35-

Document Name Description

Detailed submissions with Detailed submissions with seven annexures uploaded Seven annexures uploaded on grievance portal on on grievance portal on Page 78 of 107

“12. Whether any documentary evidence other than the evidence produced during the course of proceedings before the Income-tax Authority has been filed in terms of Rule 46A 12. 1.If reply to 12 is Yes, furnish the list of such documentary evidence.”

4.9 Basis what is stated above from para 4.5 to 4.8 we find that there is indeed an application for the additional evidence” to be taken on record before the Ld. CIT(A) & the same was “detailed by submission with seven annexures [270 pages] uploaded on grievance portal on 09.12.2022” the reference of which we find on brief statement of facts mentioned in column 11 of the form no.35 (supra). [para4.6][column 11(3) form 35]

“01) The appellant is engaged in manufacturing and sales of Soyabean Oil and DOC in its solvent plant situated at Dewas (MP). Purchases are being effected from registered dealers of MP as well from outside the State. Regular books of accounts are maintained. The company is also engaged in trading and sale of refined oil during the year and its total turnover Rs. 685.75 crores. The purchases/expenditure under various heads are properly supported by bills, MTRs, traveling bills etc. whereas on professional charges, testing and analysis charges, advertisement etc. TDS has also been made as reported in Tax Audit Report. There being continuous growth in the turnover year after year, expenditure were incurred genuinely and they are proportionate to the expenditure incurred in the earlier year as evident from the previous

Page 79 of 107 A.Y. 2021-22 year(s) expenses narrated in the profit and loss account itself. Assessment orders in earlier years were also completed u/s 143(3) of the Act and considering the proper maintenance of accounts, book results were accepted.

02) The appellant furnished the return of income within prescribed time limit under section 139(1) of the Act on 14.03.2022 declaring the same at Rs.20,87,25,840/-. The return was processed u/s 143(1) of the Act by CPC determining total income at Rs.20,94,62,720/-by making addition of Rs.4,46,360/-towards delayed payment of P.F. and ESIC and Rs.2,90,525/-being payment of leave encashment paid before due date of return, which are subjudice in appeal. Thereafter, the return was selected for scrutiny under CASS and due to partial compliance of notices u/s 142(1) of the Act, order u/s 144 read with Section 1448 of the Act was passed on 19.12.2022 determining total income at Rs.47,59,29,192/-thereby addition of Rs.26.65 crores as under a) By application of average gross profit rate of 7.20 percent on Turnover Rs. 16,77,57,242/-1 b) Disallowance of foreign currency fluctuation loss. Rs. 60,63,000/- c) Disallowance out of traveling and conveyance expenses. (1/5th) Rs. 16,57,600/- d) Disallowance of sales promotion expenses and brokerage/commission Rs.1,82,82,000/; e) Amount due to sundry creditors treated as unexplained (100 percent) Rs.7,22,60,000/-: f) Delayed payment of PF & ESIC Rs.4,46,360/- Total addition to returned income Rs.26,64,66,202/- 03) Admittedly, in response to notices u/s 142(1) of the Act and show cause notice thereafter, partial response were submitted on 22.10.2022 and 25.11.2022 by the Accountant of the company.At the outset, such non-compliance was due to irresponsible attitude of the new staff member appointed during the year to handle tax matters who submitted incorrect details from the audited accounts of associate Pubic Limited Company. Such submissions not only resulted into mismatch of figures of Profit and Loss account, inventories etc. for the year under assessment but also resulted aforesaid additions which adversely effected the credentiality of the appellant company who had always been co-operative in prompt compliance of the notices issued by the Tax Department in early years. As regards fin opportunity vide notice dated 01.12.2022, the submissions were required to be made on 05.12.2022. A request was made immediately on 02.12.2022 to grant short adjournment upto 11.12.2022 only because the father of Page 80 of 107 A.Y. 2021-22 the Manager (Taxation) had expired on 21.11.2022 and she was unable to attend till 05.12.2022. Such request was not looked into and by observing that there was no response by the appellant company in the assessment order.. In fact, the appellant tried to submit complete required details on the Portal on 09.12.2022 but the same was closed by the AO hence such details were uploaded in seven Annexures (270 Pages) on GRIEVANCE PORTAL on 09.12.2022 itself that is much before the order passed under section 144 of the Act on 19.12.2022. There had never been any such occasion resulting into exparte assessment due to bonafide reasons stated above.”

4.10 Moving forward we find that since the “Impugned Assessment Order” was u/s 144 r.w.s 144B of the Act & the assessee corporate was aggrieved of it. It is but natural besides being a matter of statutory right that the same would be challenged & was so challenged accordingly with the “additional evidence application & documents [supra]. Further it is a case of the assessee corporate that as per notice dated 01.12.2022 they were required to make submission on 05.12.2022 before the Ld. AO. They however sought adjournment upto 11.12.2022 [as the father of manager (taxation) expired on 21.11.2022] & such request was not looked into they then tried to furnish the complete required details on the portal on 09.12.2022 but the same was “closed” on by Ld. AO on 09.12.2022 & therefore such details were uploaded in the seven Annexures (270 pages), on the “grievance portal” on 09.12.2022 itself much before the Page 81 of 107 4.11 Moving forward we observe that the Ld. CIT(A) in the “Impugned Order” has observed & recorded as follows amongst others:-

“4.2 The appellant has also admitted that in response to notices u/s 142(1) of the Act and show cause notice thereafter, partial response were submitted on 22.10.2022 and 25.11.2022 by the Accountant of the company. The appellant submitted that such non-compliance was due to irresponsible attitude of the new staff member appointed during the year to handle tax matters who submitted incorrect details from the audited accounts of associate Public Limited Company. The appellant contented that such submissions not only resulted into mismatch of figures of Profit and Loss account, inventories etc. for the year under assessment but also resulted aforesaid additions. As regards final opportunity vide notice dated 01.12.2022, the appellant submitted that submissions were required to be made on 05.12.2022 and that request was made immediately on 02.12.2022 to grant short adjournment upto 11.12.2022 only because the father of the Manager (Taxation) had expired on 21.11.2022 and she was unable to attend till 05.12.2022. The appellant submitted that such request was not looked into and AO observed that there was no response by the appellant company in the assessment order. 4.3 The appellant submitted that it tried to submit complete required details on the Portal on 09.12.2022 but the same was closed by the AO hence such details were uploaded in seven Annexures (270 Pages) on GRIEVANCE PORTAL on 09.12.2022 itself i.e much before the order passed under section 144 of the Act on 19.12.2022. During the course of appeal proceedings, the appellant submitted request for admittance of additional evidences as seen from Form 35. Therefore, the submissions of the appellant were forwarded to the AO for a remand report on 27.05.2024 along with reminders on 14.06.2024 and 01.08.2024 but till date no remand report has been received from the AO. Therefore, it is presumed that the AO has no comments to offer on the submission of additional evidences of the appellant. 4.4 As per the Rule 46A(1) of Income-tax Rules, 1962, under the following circumstances the appellant is allowed to file the additional evidences;

Page 82 of 107 A.Y. 2021-22 1. Where the assessing officer has refused to admit any evidence, which ought to have been admitted or 2. Where appellant was prevented by the sufficient cause from producing the evidence called upon by the assessing officer or 3. Where appellant was prevented by the sufficient cause from producing the evidence before the assessing officer, which is relevant to any ground of appeal or 4. Where the assessing officer passed the assessment order without giving proper opportunity of being heard to the appellant. 4.5 I find that it is submitted by the appellant that partial responses were submitted on 22.10.2022 and 25.11.2022 by the Accountant of the company who submitted incorrect details from the audited accounts of associate Public Limited Company resulting into mismatch of figures of Profit and Loss account, inventories etc. for the year under assessment but also resulted aforesaid additions. As regards final opportunity vides notice dated 01.12.2022, the appellant submitted a request on 02.12.2022 to grant short adjournment upto 11.12.2022 only because the father of the Manager (Taxation) had expired on 21.11.2022 and she was unable to attend till 05.12.2022. I find that the appellant tried to submit complete required details on the Portal on 09.12.2022 but the same was closed by the AO hence such details were uploaded in seven Annexures (270 Pages) on GRIEVANCE PORTAL on 09.12.2022 itself i.e much before the order passed under section 144 of the Act on 19.12.2022. I find that the appellant was prevented by the sufficient cause from producing the evidence before the AO i.e due to the father of the Manager (Taxation) had expired on 21.11.2022 and she being unable to attend till 05.12.2022 and the AO passed the assessment order without giving proper opportunity of being heard to the appellant i.e the appellant submitted a request on 02.12.2022 to grant short adjournment upto 11.12.2022 but it was not granted by the AO. I am of the considered view that the said evidences are importance in determining the correct income of the appellant and therefore in the interest of natural justice, the additional evidences submitted are admitted under the provisions of Rule 46A of the I.T Rules, 1962 and considered in deciding the present appeal on merits.”

4.12 The revenue in the present appeal has agitated the issue of “additional evidences” being admitted & taken into consideration by Ld. CIT(A) in passing the impugned order on Page 83 of 107 A.Y. 2021-22 merits by raising the ground no.6 which we have already detailed above (supra). Additionally the revenue has also taken serious objection on the issue of additional evidence primarily being that such additional evidences ought to have been filed by the assessee cooperate at the level of AO being fundamental evidences & it is the primary duty of assessee corporate to do so at the earliest time & in the instant case they could not file the same despite sufficient time of about six months at their disposal. The assessee cooperate therefore was “non complaint”

& wanted to avoid the rigors of the scrutiny assessment on one pretextor the other as detailed minutely in the “Impugned Assessment Order”. The revenue has urged that had these additional evidence [270 pages] would have been filed during the course of the assessment proceedings [ not on grievance portal on 09.12.2022 the Ld. AO could have conducted the due verification, cross verification, could have conducted inquiry & investigation so on & so forth as is required under the security assessment for the adjudication & adjudgement but that has not happened.

Further the Ld. DR for the revenue has rightly pleaded & has fairly stated at the end of the hearing that despite requests of the Page 84 of 107 A.Y. 2021-22 Ld. CIT(A) the Ld. AO has not filed any remand report & therefore, the ends of justice requires that the “Impugned Order” should be set aside in order to meet both the natural justice as well as the ends of justice while keeping in view that the Ld. CIT(A) wide email dated 27.05.2024 had requested to the Ld. AO to file the remand report on additional evidences and the same was not submitted. Even on 14.06.2024 the Ld. AO was requested by e- mail reminder to file the same still the same was not filed. A final reminder was issued by e-mail dated 01.08.2024 giving reference of prior e-mails of 27.05.2024 & 14.06.2024 still the Ld. AO did not submit the remand report on or before 12.08.2024. [ submissions of assessee was forwarded to Ld. AO]. we find that in the letter dated 13.10.2025(supra) of Dy CIT 1(1)

Indore it is stated that reason for nonsubmission of remand report cannot be given as it is not available on records. Be that as it may the fact remains is that there is no remand report of Ld.AO is available on record despite opportunities to him by Ld. CIT(A)(supra) by two reminders.

4.13 The moot question which is required to be answered in present appeal by us is “whether in such peculiar facts &

Page 85 of 107 A.Y. 2021-22 circumstances of the case in hand the Ld. CIT(A) was right in admitting & considering while deciding the first appeal on merits the additional evidence [270 pages ][filed on grievance portal on 09.12.2022] without waiting for the remand report to be filed by the Ld. AO? The answer to this question lies in the very Rule 46A of the income tax Rules 1962 which we reproduce as below;-

46A. (1) The appellant shall not be entitled to produce before 83[Joint the Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :—

(a) where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.

84[Joint (2) No evidence shall be admitted under sub-rule (1) unless the Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.

(3) The 84[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence

(a) to examine the evidence or document or to cross- examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.

84[Joint (4) Nothing contained in this rule shall affect the power of the Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271. We are of the opinion basis para 4.5 of the Impugned Order that Ld. CIT(A) ought not to have considered the additional evidence [270 pages uploaded on grievance portal on 09.12.2022] while deciding the 1st appeal on merits as the Ld. AO failed to give remand report which action of Ld. CIT(A) is contrary to the Rule 46A(3). Under Rule 46A(3) it is mandatory to file the remand report by Ld. AO. In this regard we gainfully refer to the judgment of the Hon’ble Delhi High Court in case of CIT, central vs.

Manish Buildwell (P) ltd. Reported in [2011] 16 taxmann.com 27(Delhi) from the point of view that Rule 46A is mandatory in character & cannot be overlooked particularly the following extract from the para 22 to 24 which is reproduced as under:

Page 87 of 107 A.Y. 2021-22 22. As we have with the consent of the learned counsel, heard them on merits, we proceed to decide the aforesaid substantial questions of law. Since the CIT (A) himself refers to Rule 46A and has also admitted that the confirmation letters adduced by the assessee before him were technically fresh evidence, it is not possible to accept the plea of the learned counsel for the assessee that the CIT (A), in examining the confirmation letters, was exercising his independent powers of enquiry under sub-Section (4) of Section 250 of the Income tax Act. It is true that the CIT (A) as first appellate authority has conterminous powers over the sources of income constituting the subject matter of the assessment, except the power to tackle new sources of income not considered by the Assessing Officer, and can do what the Assessing Officer can do and can direct the Assessing Officer to do what he has failed to do, as held by the Supreme Court in the case of Commissioner of Income-Tax, U.P. v. Kanpur Coal Syndicate, (1964) 53 ITR 225, but in this case, the CIT (A) did not exercise this right. This power, which is recognized in sub-Section (4) of section 250, has to be exercised by the CIT (A) and there should be material on record to show that he, while disposing of the appeal, had directed further enquiry and called for the confirmation letters from the assessee even in respect of receipt of monies from customers by way of cheques. Rule 46A is a provision in the Income Tax Rules, 1962 which is invoked, on the other hand, by the assessee who is in an appeal before the CIT (A). Once the assessee invokes Rule 46A and prays for admission of additional evidence before the CIT (A), then the procedure prescribed in the said rule has to be scrupulously followed. The fact that sub-Section (4) of Section 250 confers powers on the CIT (A) to conduct an enquiry as he thinks fit, while disposing of the appeal, cannot be relied upon to contend that the procedural requirements of Rule 46A need not be complied with. If such a plea of the assessee is accepted, it would reduce Rule 46A to a dead letter because it would then be open to every assessee to furnish additional evidence before the CIT (A) and thereafter contend that the evidence should be accepted and taken on record by the CIT (A) by virtue of his powers of enquiry under sub- Section (4) of Section 250. This would mean in turn that the requirement of recording reasons for admitting the additional evidence, the requirement of examining whether the conditions for admitting the additional evidence are satisfied, the requirement that the assessing officer should be allowed a reasonable opportunity of examining the evidence etc. can be thrown to the winds, a position which is wholly unacceptable and may result in unacceptable and unjust consequences. The fundamental rule which is valid in all branches of law, including Income Tax Law, is that the assessee should adduce the entire evidence in his possession at the earliest point of time. This ensures full, fair and detailed enquiry and verification. A 7-Judge Bench of the Supreme Court in Keshav Mills

Page 88 of 107 Kriti Nutrients Ltd.

A.Y. 2021-22 Co. Ltd. v. Commissioner of Income-Tax, Bombay North, Ahmedabad (1965) 56 ITR SC 365 had observed as under:- "Proceedings taken for the recovery of tax under the provisions of the Act are naturally intended to be over without unnecessary delay, and so, it is the duty of the parties, both the department and the assessee, to lead all their evidence at the stage when the matter is in charge of the Income-tax Officer."

Page 89 of 107 Kriti Nutrients Ltd.

A.Y. 2021-22 produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.] We are highlighting these aspects only to press home the point that the conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised and not exercised in a routine or cursory manner. A distinction should be recognized and maintained between a case where the assessee invokes Rule 46A to adduce additional evidence before the CIT (A) and a case where the CIT (A), without being prompted by the assessee, while dealing with the appeal, considers it fit to cause or make a further enquiry by virtue of the powers vested in him under sub- Section (4) of Section 250. It is only when he exercises his statutory suo moto power under the above sub-section that the requirements of Rule 46A need not be followed. On the other hand, whenever the assessee who is in appeal before him invokes Rule 46A, it is incumbent upon the CIT (A) to comply with the requirements of the Rule strictly.

4.14 We are of the considered view that while the Ld. CIT(A) called upon the Ld. AO to file the remand report by two e-mail reminders (supra) & while it is also true that the Ld. AO failed to place any remand report before the Ld. CIT(A) still the fact remains is that the Rule 46A(3) has not complied with which is a mandatory requirement of law and the Ld. CIT(A) proceeded to decide the 1st appeal on merits basis additional evidence despite no remand report of the Ld. AO [Rule 46A(3)]. In brief, we would

Page 91 of 107 A.Y. 2021-22 like to bring home the point that additional evidence [ 7 annexures & 270 pages] have not been subjected to any due diligence, verification, cross verification, inquiry, investigation, etc. So on & so forth both at the stage of “Impugned Assessment Order” as well as at the stage of “Impugned Order” the revenue has made a grievance of it & we concur with the view of revenue on this score.

4.15 The Ld. CIT(A) called for the remand report from the Ld. AO & no remand report was furnished by the Ld. AO to the Ld. CIT(A) despite reminders & thereafter Ld. CIT(A) proceeded to admit the additional evidence & considered the same while deciding 1st appeal on merits by passing the “Impugned Order”. The fact remains is that there are no apparent reason from the record as to why it was not filed despite opportunities to the Ld. AO.

The remand process u/s 46A(3) remained incomplete for the one reason or the other not apparent on record. The Ld. CIT(A) proceeded to decide 1st appeal & deleted the additions so made in the “Impugned assessment order”. The assessee corporate in first six months of the assessment proceedings has been displacing continuous non-cooperation too hence the fact of Page 92 of 107 A.Y. 2021-22 passing of the “impugned assessment order” u/s 144 of the Act . It is also required to be noted & appreciated that the assessee corporate is not novice to the Income Tax proceedings including the appellate one. There are two e-mail by reminders on record i.e dated 14.06.2024 & 01.08.2024 from the Ld. CIT(A) to the Ld. AO for seeking the remand report which effectively works out to nearly 2-1/2 months time frame & simultaneously it cannot be a fact that the assessee corporate was unaware of such development while the studded silence from 27.05.2024 till 12.08.2024 [last date to file remand report] is noticeable on part of the Ld. AO but simultaneously as a good corporate citizen nothing also prevented the assessee to Air his grievance before the Ld. AO or the Ld. CIT(A) or on the grievance portal as to why no remand report from the Ld. AO is not forthcoming or as to why the Ld. AO is not calling them to participate in the remand proceedings.

4.16 We are therefore, of the considered opinion that in the first appeal the Ld. CIT(A) ought to have weighed both the sides facts & circumstances & further the same should have been reflected

Page 93 of 107 A.Y. 2021-22 in the “Impugned Order”. In the ultimate analysis of things the “Impugned Order” came to be passed on merits by taking into consideration merits basis the additional evidence without the views of the Ld. AO who in fact has a statutory right obligation too to “comment” on such evidences. Save & except the period of 2-1/2 months (supra) more time coupled with admonition could have been afforded/given to the Ld. AO to send the remand report as the assessee corporate was given an opportunity of nearly six months [in time bound proceedings] during the stage of the asessement proceedings to furnish the required details. To sum up, we am also of the considered view that the procedure adopted by the Ld. CIT(A) does not meets the requirement of both the natural justice as well as the ends of justice u/s 46A(3).

4.17 We are of the opinion that when the additional evidence is filed by the assessee corporate under Rule 46A of the Rules & the Ld. CIT(A) remands the matter to the Ld. AO for a remand report which is a mandatory & statutory requirement, the Ld. AO should be given an effective and meaningful opportunity to examine such evidence & to furnish a remand report. Deciding

Page 94 of 107 A.Y. 2021-22 the issue on merits amounts to denying the Ld. AO his statutory rights & results in infraction of Rule 46A(3). It should not be forgotten that the assessee corporate was too non compliant during assessment proceedings for nearly six months. Despite such non-cooperative attitude of the assessee for six months before the Ld. AO the Ld. CIT(A) proceeded to grant substantial relief without benefit of a complete remand exercise (46A(3)) which is a violation of due process of law.

4.18 We are of the opinion that nature of opportunity afforded by e-mails (supra) of the Ld. CIT(A) is that a remand report from the Ld. AO was requisitioned on additional evidences. [please see letter dated 13.10.2022 of Dy CIT 1(1) Indore (supra]. The requirement of law i.e. Rule 46A/46A(3) as enunciated by the Hon’ble Delhi High Court in case of CIT vs. Manish Buildwell (P) Ltd. (supra) is that every procedural requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised & not exercised in a routine or cursory manner. In the aforesaid letter dated 13.10.2024 it is stated that “As per the information available

Page 95 of 107 CIT(A) & the remand report has been called for & the reminder has been issued only through e-mail on ITBA”. The revenue’s expectation by virtue of this letter that in case of remand report a letter must come from the Ld. CIT(A) but in the instant case the remand report is called for by e-mail dated 27.05.2024 & reminders has been issued only through e-mail on 14.06.2024 & 01.08.2024 on ITBA. We are therefore of the view that in view of the mandatory & statutory nature of Rule 46A/46A(3) a letter as is the expectation of department should also go to the Ld. AO which should be well defined, speaking & clear. It should be lucid too. In the said letter the Ld. CIT(A) should state his requisitions as per Rule 46A/46A(3) on “additional evidence documents” filed by the assessee. Simply asking the remand report on portal from the Ld. AO shows that the powers u/s 46A/46A(3) are exercised in routine & cursory manner. The point which we are trying to drawn attention is that in Rule 46A/46A(3) every procedural requirement mentioned therein must be strictly complied with so that the Rule is strictly complied with so that the Rule is meaningfully exercised & not Page 96 of 107 (supra).

4.19 We are of the considered view basis Rule 46A/46A(3) once the remand report is sought by the Ld. CIT(A) as is the case in the instant appeal then full, complete & effective opportunity & reasonable opportunity should be given to the Ld. AO to submit the same. No doubt the Ld. CIT(A) has issued two reminders(supra) but still a detailed separate letter & more time should have been afforded to the Ld. AO, the revenue has made a greivance of it & we concur with it as the requirement of law is mandatory in nature. The consequence of it is that documents accompanying additional evidence totaling seven annexures uploaded on grievance portal has not been tasted & has not gone to the rigor’s of Rule 46A(3). Further even the “Impugned assessment order” is an order under section 144 of the Act. We are therefore, of the view that in order to compute & assessee the total income of the assessee it is essential for just fair & for equitable adjudication & adjudgement that due diligence,

Page 97 of 107 A.Y. 2021-22 verification, cross verification, inquiry, investigation so on & so forth is done by the Ld. AO so that real income of the assessee is computed & assessed in accordance with law. Both the revenue & assessee should cooperate with each other in sportsmanship manner. The Ld. CIT(A) in the Impugned order on internal page 6 para 4.2 has observed as under:-

“During the course of appeal proceeding, the appellant submitted request for admittance of additional evidence as seen from form

Page 98 of 107 A.Y. 2021-22 giving sufficient time to the AO to submit remand report with sufficient time to the AO to submit remand report in the case which require through verification of books & additional evidence submitted by the assessee before the Ld. CIT(A)” we find substance in the ground raised by the revenue. Revenue is right that in order to carry out verification of books & additional evidence sufficient time is required. We therefore, concur with ground raised by the revenue as verification u/s 46A(3) is time consuming exercise where thorough inquiry & investigation is required to be made. Since sufficient time was not given there is a violation of principles of natural justice & the ends of justice in the final analysis require appraisal of evidence in order to compute & assess total income of the assessee. We are also of the view that Ld. CIT(A) having opted to seek a remand report in respect of documents submitted by way of additional evidence he should have waited for the remand report. The remand report was necessary for a adjudication of subject matter of the appeals.

The Ld. CIT(A) besides two e-mail reminders (supra) should have taken “extra steps” for early submission of report for just adjudication of the appeal. The Ld. CIT(A) could be said to have Page 99 of 107 A.Y. 2021-22 proceeded in violation of the principles of natural justice. It is not open for the Ld.CIT(A) to dispose of appeal without a remand report from the Ld. AO.

4.20. We have given by thoughtful consideration & perused the material available on record including the paper books filed by the assessee & documents filed by the revenue. It is an undisputed fact that the Ld. CIT(A) called for a remand report from the Ld. AO on 27.05.2024 and issued reminders by e-mails on portal on 14.06.2024 & 01.08.2024 the e-mail dated 01.08.2024 was final opportunity to the Ld. AO to submit remand report by 12.08.2024. The impugned order is dated 06.09.2024.

Though Rule 46A(3) prescribes a reasonable opportunity to be given to the Ld.AO to response by filing the remand report. Here in this case, this reasonable opportunity is not given to the assessing officer. Without such response the Ld. CIT(A) has deleted the additions which in our considered view is not within the provision of law. In present case only two opportunities were given to the AO that too in span of 2-1/2 months approximately.

Therefore, in my view the ld. CIT(A) is not correct in deleting the Page 100 of 107 A.Y. 2021-22 addition without hearing the assessing officer & without a remand report. Therefore, in the interest of the ends of justice & so also in the interest of principles of natural justice, we deem it fit to set aside the matter back to the file of the Ld. CIT(A) to get the remand report from the Ld. AO by giving one more opportunity to the Ld. AO and then decide the appeal on merit of the case.

4.21. We are also of the considered view that bare reading of section 46A/46A(3) clearly reflects parse that the first appellate authority [FAA] shall not take into consideration any evidence produced under the Rule unless the AO is allowed a reasonable opportunity to examine the evidence/documents. This mandate of Rule 46A/46A(3) cannot be dispensed with as besides being statutory it embodies the principles of natural justice too. The Rule 46A/46A(3) cannot be whittled down or brushed aside. It is mandatory & to be strictly interpreted. It is not ritualistic in nature. Full and complete effect must be given to the Rule 46A(3).

Its mandate cannot be dispensed with. The opportunity contemplated therein to AO should be real. Opportunity should

Page 101 of 107 A.Y. 2021-22 be full & complete. The reasonable period should be afforded to the Ld. AO so that the remand report can be submitted. Since Rule 46A/46A(3) is mandatory & statutory the Ld. CIT(A) should take proactive steps too. The opportunity of 2-1/2 months in our considered opinion is not effective & reasonable opportunity for obtaining remand report as it is must for FAA to dispose off the first appeal.

4.22 The bare and simple perusal of Rule 46A which deals with the production of additional evidence before the Dy CIT(A) & the Ld. CIT(A) starts with a negative note that the appellant shall not be entitled to produce before the Dy CIT(A) or as the case may be CIT(A) any evidence whether oral or documentary, other than evidence produced by him during the course of proceedings before the Assessing Officer. Further u/s 46A(3) the Dy CIT(A) or as the case may be the CIT(A) shall not take into account any evidence produced under sub Rule (1) unless the assessing officer has been allowed a reasonable opportunity:-

(a) To examine the evidence or document or to cross examine the witness produced by the appellant, or Page 102 of 107 The use of the word “Reasonable opportunity” to the assessing officer assumes lot of importance. Whether the two e-mail reminders sent by the Ld. CIT(A) to the Ld. AO on the Portal to send to him the remand report (supra) can be said in law to be a “Reasonable Opportunity” in the facts & circumstances of the present case. In our considered view answer to such question is “No for morethan one reason. Firstly the Rule 46A/46A(3) is mandatory & statutory in nature. It is required to be interpreted strictly. It is not ritualistic in nature reference is already made by me to the judgment of the Hon’ble Delhi High Court in case of CIT vs. Manish Buildwell (P.) Ltd. [supra] by virtue of which our aforesaid view/opinion is fortified. Secondly the word “reasonable opportunity” in our view means effective reasonable opportunity. Two e-mail reminders (supra) cannot in our respectful view can be said to be “effective reasonable opportunity”. The Ld. CIT(A) in this regard our view is expected to take little more proactive steps, an extra steps, travel an extra-mile as the“remand process”,the remand report or steps

Page 103 of 107 A.Y. 2021-22 contemplated by Rule 46A(3) are mandatory in the nature. It is essential for disposal of appeal on merits. The Ld. AO in this regard is required to do an extensive exercise under 46A(3) which are time consuming in nature & require time at the end of the Ld.

AO who being a field officer is a busy office due to work load pressure/time barring nature of assessments etc. Therefore, in our considered view/opinion opportunity granted by Ld. CIT(A)(supra) is not adequate & effective & reasonable opportunity within the meaning of Rule 46A(3). Total time frame is 2-1/2 months which is short. Further a separate letter apart from two email on portal would have made a difference to the Ld. AO as was his expectation too. Hence we concur with the submission made by the Ld. DR in this regard & hold that the Ld. CIT(A) did not provide adequate & effective reasonable opportunity within the meaning section 46A(3) & he ought not to have proceeded with first appeal on merits in the absence of remand report from Ld. AO. Since we are allowing the ground no.6 of the revenue the question of examining the remaining grounds does not arises. We also do not find anything on the records in-terms of the section 250(2)(b) whether the Ld. AO was Page 104 of 107 A.Y. 2021-22 given any opportunity of hearing before the “Impugned Order” on merit was passed. We also observe & find that additional evidence filed by the assessee was complex and voluminous which required time hence according to our considered opinion more time & so also reasonable opportunities ought to have been afforded by the Ld. CIT(A) to the Ld. AO. The Impugned order is therefore in the violation of mandatory procedural provision of Rule 46A(3) of the Income Tax Rules 1962 as no adequate & effective reasonable opportunities was given to the Ld. AO for submission of remand report within the meaning of Rule 46A(3) of the Act. The two email reminders (supra) are not enough indication of adequate & effective reasonable opportunities. We also hold that deciding the first appeal without awaiting the Remand Report (46A(3)] amounts to denying the Ld. AO his statutory right & Results in the violation of principles of natural justice & in process the ends of justice has suffered.

4.23 We therefore, set aside the Impugned order as & by way of remand back to the file of ld. CIT(A) with a direction to him to obtain from the Ld. AO remand report. The Ld. AO in this regard

Page 105 of 107 A.Y. 2021-22 be given opportunity & time of about four months to complete the steps u/s 46A(3). After obtaining the remand report & providing the opportunity of hearing to both Ld. AO & assessee the Ld.

CIT(A) would be at liberty to pass appropriate order on merits which order should be reasoned & speaking one.

4.24 Before parting with the case we feel it is our bounden duty to state that the Ld. AO ought to have followed the directions of the Ld. CIT(A) as he is not only an officer superior in rank but also discharges the quasi judicial functions.

4.25 In the premises drawn by us, the impugned order is set aside and the mater is remanded back to the file of Ld. CIT(A) who shall pass a fresh speaking order after obtaining remand report from the Ld. AO for which sufficient and reasonable opportunity along with the time as indicated in pra 4.23 would be given under Rule 46A(3) to the Ld. AO. Needless to state that the fresh order to be passed by the Ld. CIT(A) would be reasoned one which would take into consideration the entire gamete of the case.

Page 106 of 107 A.Y. 2021-22 5. Order 5.1 In the premises drawn up by us the “Impugned Order” is set aside & the case of the assessee is remanded back to the file of the Ld. CIT(A) on denovo basis with directions issued as aforesaid (supra).

5.2 In result the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in open court on 09.01.2026.